Develop This: De Niro May Team With Miramax on Brooklyn Movie Yard

Harvey Weinstein, the chairman of Miramax Films, is exploring whether to join Robert De Niro in the actor’s quest to build a $150 million movie and television studio at the Brooklyn Navy Yard, according to a source familiar with the negotiations.

The source told The Observer that Miramax is in talks with the investor group led by Mr. De Niro’s company, Tribeca Productions that is assembling financing for a palatial studio on 15 acres of industrial wasteland at the Navy Yard. Mr. De Niro’s group includes Steven Roth, the powerful chairman of Vornado Realty Trust, as well as two little-known entrepreneurs who developed the plan last spring.

As part of the proposal, the city has agreed to help the plan along with a hefty subsidy: a $25 million low-interest loan, the source said.

The yearlong effort to put together the immensely complex and risky deal has been plagued by false starts, backstage tensions at City Hall and the fight between Mayor Rudolph Giuliani and Gov. George Pataki. But the bare outlines of a deal now have been reached, the source said. Nothing has been signed and concerns over construction costs and financing issues could scuttle the proposal, the source cautioned. But the deal has gotten far enough for key players to circulate the final drafts of a letter of intent, the source said.

Efforts to build a studio overlooking Manhattan’s sweeping skyline has stirred tantalizing visions of a Hollywood-on-the-East River, attracting boatloads of stars to Brooklyn. The project would also help directors who are hard pressed for interior studio space in a city whose gritty, diverse streetscapes are more sought after than ever for exterior shots.

But ever since the two entrepreneurs-Cary Dean Hart, a set designer, and Louis Madigan, an amiable Internet addict-dreamed up the proposal last spring, investors have steadfastly declined to finance it. Movies and television shows rent short-term and don’t provide the long-term revenue streams sought by lenders.

An alliance between Mr. De Niro and Mr. Weinstein, however, could boost the credibility of the project in the eyes of producers and investors alike. What’s more, Miramax’s apparent interest comes as Mr. De Niro’s group and City Hall have agreed in principle for the first time on some of the project’s financing, the source told The Observer .

The informal agreement, the source said, has taken the following shape: Mr. De Niro’s group, reportedly backed by Vornado, would put up between $35 million and $40 million. The Brooklyn Navy Yard Development Corporation, which runs the Navy Yard, would chip in $8 million. Add $25 million from the city, and $70 million, or half the project’s full cost, is all but secured.

“Now you have basically $70 million committed,” the source said. “None of that was there before.”

But a number of looming obstacles remain. For one, success will turn on whether Mr. De Niro and City Hall can succeed in persuading lenders to put up the other $80 million needed to launch the mammoth project. One source expressed optimism, saying negotiations were all but concluded with several interested lenders, but others said the lenders could easily walk away.

What’s more, people close to the negotiations are worried that construction costs, now being calculated, will exceed the current target of $150 million or $160 million-a circumstance that could easily cause the deal to fall apart.

Higher construction costs are particularly frightening to investors who wonder how a New York studio can lure business from Los Angeles, where big production companies already have their own sound stages. “How do you compete on a production basis for studios that have large facilities themselves, such as Universal, Disney and Paramount?” asked Christopher Dixon, an entertainment analyst at Paine Webber.

People close to the negotiations are keenly aware of these problems. “At this point, everyone is working to try like hell to make it happen,” said one executive familiar with ongoing talks. “All parties want to try to do it. Nobody’s walking away. But it’s a tough deal to do-it’s not a slam dunk.”

If the deal does get done, it would be a huge coup for Mayor Giuliani, who has yet to launch a major capital project. In their current form, plans call for a dozen enormous sound stages to be built on 15 acres of industrial landscape that lies empty save for three enormous, shedlike structures that were once used to store and manufacture parts for World War II battleships and aircraft carriers. Replacing them would be a 700,000-square-foot facility-a “production factory” equipped for full production of major motion pictures, sitcoms, commercials and music videos.

Mr. De Niro has the clout to get other big names in film to pay attention, starting with Mr. Weinstein. Miramax rents a floor of Mr. De Niro’s Tribeca Film Center, on Greenwich Street. Mr. De Niro is perhaps calculating that Mr. Weinstein will feel a surge of New York boosterism after Miramax’s smashing victory at the Oscars on March 21-sentiment that might encourage Miramax to join a deal for a New York film outpost to challenge Hollywood’s hegemony.

The project also might make good business sense for Mr. De Niro. A studio at the Navy Yard might allow him to cut rental costs for his own production space, while drawing income by leasing space to others.

Demand for such space seems to be growing in New York. The total number of feature films shot in the city in 1998 was 221, an increase over the preceding year for the fifth year in a row. But each year, much of the studio postproduction work-the most lucrative work in filmmaking-is done on the West Coast.

Meanwhile, television production shooting days have gone up 113 percent since 1993. But the shooting days tend to be exterior shots. There’s been no shortage of shows supposedly set in the city whose interior filming has been done in Los Angeles or Toronto: Seinfeld , Friends and NYPD Blue , to name three.

The sound stages that do exist in New York are often booked up or are too small for major productions. There’s Kaufman Astoria Studios in Queens, home to The Cosby Show and Sesame Street . Kaufman has six sound stages, but it is fully booked most of the time. The studios at Chelsea Piers have six sound stages-but five are being used to shoot episodes of Law and Order and Spin City .

Some analysts believe demand for studio space is overstated-and that producers are unwilling to pay rents high enough to support the cost of building high-tech studios. Nonetheless, a vast new sound stage in Brooklyn could help lure producers who want New York.

“Many producers would prefer to shoot here, but they can’t,” said Ed Sherin, the executive producer of Law and Order . “There’s not [enough] studio space. If we were to build substantial studio space in Brooklyn, it would make the East Coast an attractive place to come.”

State officials, meanwhile, have been scrounging up space for directors in armories and even old airplane hangars, according to Patricia Kaufman, the deputy commissioner of the Governor’s Office of Motion Picture and Television Development. These are the problems that led Mr. Madigan and Mr. Hart to approach the Giuliani administration. Last June, City Hall granted their company, New York Studios, a long-term lease at the Navy Yard-provided they could obtain $190 million in financing by December 1998. But investors were leery, seeing the plan as a pipe dream of two greenhorns who had little clout and less cash. Sony Pictures Entertainment Company raised hopes by eyeing the project, then reportedly decided it would only consider managing the complex once it was built. Both Mr. Madigan and Mr. Hart refused to comment on any aspect of the Navy Yard.

Last summer, Mr. De Niro heard of the plan. He journeyed out to the Navy Yard with an entourage-and was said to be enamored of the site’s quirky post-industrial structures and Manhattan views.

But as Mr. De Niro and his partner, Mr. Roth, took a more active interest, some observers wondered whether they would muscle out the two guys who came up with the idea and had already spent months searching for financing. According to a person close to the negotiations, those tensions have since been resolved.

At another point, talks seemed complicated by the feud between Mr. Giuliani and Governor Pataki. According to a person familiar with talks at the time, state officials, enamored of the Navy Yard project, wanted to offer Mr. Madigan and Mr. Hart tax incentives and transportation to the site. But Deputy Mayor Rudy Washington, who oversees the Navy Yard, insisted that their company steer clear of the state, the person said.

With those tensions aside, supporters of the project are hoping that Mr. De Niro and City Hall will finally jump-start the plan.

Ten years ago, Hollywood insiders looked askance at Mr. De Niro as he poured millions of dollars into TriBeCa, another part of the city that seemed unlikely to sustain a production company. According to a friend of Mr. De Niro, he sees similar possibilities in the Brooklyn Navy Yard.

“Bob’s attitude towards TriBeCa was, ‘If we build it, they will come,'” the friend said. “He has the same attitude about Brooklyn.”